Dow Drops Most Since June Amid Disappointing Earnings

Oct. 23 (Bloomberg) -- U.S. stocks retreated, giving the
Dow Jones Industrial Average its biggest decline since June,
amid disappointing results at companies from 3M Co. to DuPont
Co. and as commodities erased their gain for the year.

3M, the maker of products ranging from Scotch tapes to
dental braces, and DuPont, the most valuable U.S. chemical
maker, slumped at least 4.1 percent. Freeport-McMoRan Copper &
Gold Inc. and Halliburton Co. dropped more than 3.1 percent as
commodities sank amid concern about a global economic slowdown.
Facebook Inc. surged 9.5 percent at 4:39 p.m. New York time
after posting sales that topped analysts’ projections.

The Standard & Poor’s 500 Index decreased 1.4 percent to
1,413.11 at 4 p.m. New York time, the lowest level since Sept.
5. The Dow slumped 243.36 points, or 1.8 percent, to 13,102.53.
Volume for exchange-listed stocks in the U.S. was 6.6 billion
shares, or 9.1 percent above the three-month average.

“That’s the reality of the situation that investors are
facing,” said Bruce Bittles, chief investment strategist at
Milwaukee-based RW Baird & Co., which oversees $85 billion. He
spoke in a phone interview. “There’s not much growth in the
economy. There’s lack of demand. How can revenues grow?”

Thirty-three companies in the S&P 500 were scheduled to
release results today. Third-quarter sales missed forecasts at
60 percent of companies, according to data compiled by
Bloomberg. Earnings at about 70 percent of the index’s companies
beat analysts’ estimates, the data showed.

Earnings Concern

Concern about a worsening of the earnings picture has sent
the S&P 500 down 3.6 percent from this year’s high on Sept. 14.
The decline has extended its October loss to 1.9 percent after
the index capped four straight months of gains. The benchmark
measure is still up 12 percent in 2012 on speculation central
bankers will keep economies expanding.

All 10 groups in the S&P 500 retreated at least 0.8 percent
today as commodity and financial shares had the biggest losses.
The Morgan Stanley Cyclical Index of companies most-tied to
economic growth declined 1.1 percent.

“The earnings season has not gone as well as many would
like,” said Tom Wirth, who helps manage $1.6 billion as senior
investment officer for Chemung Canal Trust Co., in Elmira, New
York. “In general, sales have been disappointing. There’s
heightened concern about global growth.”

3M dropped 4.1 percent to $88.73. The St. Paul, Minnesota-based company, which makes a majority of revenue in Europe and
Asia, cut the profit target and the top end of its goal for
sales from existing businesses to reflect what it called
“current economic realities.”

1,500 Jobs

DuPont retreated 9.1 percent, the most in the Dow, to
$45.25. The company said it will eliminate about 1,500 jobs
after posting a smaller third-quarter profit than analysts
estimated on falling demand for paint pigment.

Xerox Corp. fell 5.1 percent to $6.67. The provider of
printers and business services said third-quarter profit fell 12
percent as demand for its equipment and supplies declined.

The Standard & Poor’s GSCI spot gauge of 24 raw materials
fell for a third consecutive session, dropping 1.4 percent
today. It first erased gains for the year in May and the last
time it happened was in July. The last annual drop was in 2008.

“We believe a Mitt Romney election win -- broadly
supported by the refining industry -- could in fact threaten the
crude export ban,” Paul Sankey, a Deutsche Bank energy analyst
based in New York, wrote today in a note to investors.

Apple, the most valuable company, unveiled the iPad at an
event today in San Jose, California. The device boasts a 7.9-inch screen diagonally, compared with the 9.7-inch screen of the
current iPad. It is priced starting at $329.

Regions Financial Corp. fell 7.6 percent to $6.54 after the
bank said it would move as much as $400 million in loans to non-performing status in the fourth quarter.

Monster Beverage

Monster Beverage Corp. slid 10 percent to $41.08. The
company was removed from the Conviction Buy list at Goldman
Sachs Group Inc. The shares tumbled 14 percent yesterday after
its energy drinks have been cited in the deaths of five people
in the past year, according to incident reports that doctors and
companies submit to the U.S. Food and Drug Administration.

Facebook Inc. rose 0.9 percent to $19.50 ahead of its
earnings report. The shares rallied 9.5 percent to $21.36 after
the close of regular trading. Third-quarter sales rose 32
percent to $1.26 billion, Menlo Park, California-based Facebook
said today in a statement. That compares with the average
estimate of $1.23 billion, according to data compiled by
Bloomberg. Profit excluding certain items also exceeded
projections by a penny.

Coach Inc. surged 7.4 percent to $58.15. The largest U.S.
luxury handbag maker reported fiscal first-quarter profit that
exceeded analysts’ estimates as it kept expenses for
acquisitions and e-commerce from increasing too quickly.

United Parcel Service Inc., which is considered an economic
bellwether, rose 3 percent to $73.73. It reduced the top end of
its 2012 profit forecast after posting third-quarter earnings
that matched analysts’ estimates, buoyed by a gain in U.S.
package volumes and international exports.

Harley-Davidson Inc. added 7.7 percent to $46.89. The
biggest U.S. motorcycle maker surged after touting new models
headed to dealerships by 2015. New bikes coming by 2015 will
benefit from the company’s focus on the flagship Harley brand,
Chief Executive Officer Keith Wandell said today.

Federal Reserve Chairman Ben S. Bernanke is trying to
inject a little of the exuberance his predecessor Alan Greenspan
called “irrational” into markets for everything from stocks to
housing.

Higher Yielding

Bernanke, who is seeking to spur the economy with a third
round of so-called quantitative easing, has said his stimulus
works by lowering borrowing costs and encouraging investors to
seek higher-yielding assets. Boosting home and equity prices
through bond buying will encourage consumers and businesses to
spend more, according to Bernanke.

Since these are the same assets that plummeted during the
financial crisis after reaching record highs, “is there some
risk you could start a new bubble and repeat the whole cycle? I
suppose there is,” said Robert Shiller, the Yale University
professor who forecast the end of the Internet boom in his book,
“Irrational Exuberance,” which was published in March 2000,
the month the Nasdaq Composite Index peaked before crashing 78
percent.